The rise of the internet has radically transformed our economy and our everyday lives in ways that we now probably take for granted.
Companies such as Facebook and Snapchat have changed how we communicate with friends and family. Amazon has made it possible to order just about anything and have it delivered in a day or two. Trips to the movie rental store are a thing of the past thanks to Netflix and its peers. News from any corner of the earth is a click away.
Few things in the history of man have done more to change how we live in such a short time.
But in 2015, when the FCC decided to regulate the internet using a “common carrier” law passed before World War II, it put the future of innovation at risk.
That is because the massive investment from internet network providers is what has made it possible to see our friends’ Instagram or take advantage of any of the web’s offerings. Since 1996, American internet providers have invested $1.5 trillion to build the internet’s basic infrastructure, representing 84 percent of all investment in the internet economy according to a study by the NAACP and Communications Workers of America. While companies such as Google get much of the glory, internet providers have been the unsung heroes of the digital age.
But for the first time outside of a recession the United States has experienced a decline in broadband investment — coming quickly on the heels of those archaic FCC “net neutrality” rules. One recent survey of the 12 largest ISPs found a $3.6 billion drop-off in investment last year, when the new rule went into effect. Another found that during the five-year run up to the passage of the rules, the threat of this obsolete “Title II” utility regulation depressed investment by $35 billion every year.
That isn’t the whole story. Frank Louthan, an equity analyst with Raymond James contends that investment would have been 20 percent higher without those rules. And experts largely agree this shortfall will grow even worse because much of the current round of spending was already in the works when the FCC plan passed.
Fortunately, the new leadership at the FCC understands the problem and has promised to fix it. FCC Chairman Ajit Pai understands that the far-reaching rules, imposed by his predecessor, have done more harm than good.
These costly utility regulations are not the same as net neutrality, which deal with the separate question of preventing internet providers from blocking, throttling or harmfully discriminating against traffic online.
Net neutrality is not controversial. Almost everyone supports these basic requirements. But using a law signed by President Franklin D. Roosevelt to regulate Ma Bell phone rates during the Great Depression as a pathway to protecting net neutrality is as ridiculous as it is irresponsible.
So, Mr. Pai has rightfully made undoing this harm one of his top priorities as he takes the helm of the FCC. His plan would return the internet to the same oversight it had during its tremendous growth over the past 20 years. And it would give Congress the opportunity to pass bipartisan legislation to genuinely protect the free and open internet, without the regulatory overreach and investment hangover that Title II brings.
Critics of the chairman are already reflexively attacking this plan, even though their arguments just don’t stand up. They ignore the difference between the utility rules that are the target of the Chairman’s review, and net neutrality which everyone supports, to falsely claim this process is an attack on the open internet.
Others falsely claim that since companies haven’t stopped investing completely the utility rules aren’t hurting investment at all. That’s just illogical — and proven false by studies showing multibillion investment drops. And then there are those who resort to childish stunts that rely on outdated pop-culture references like “Rickrolling” Mr. Pai at the beginning of a recent FCC meeting.
Experts from both parties agree that utility regulation is a costly mistake. There is bipartisan concern about investment drying up. They saw what happened in Europe when a similar approach left consumers with slower internet speeds and drove away innovators.
Mr. Pai’s approach will ensure America’s digital economy continues to thrive.
Activists who claim to care about net neutrality should turn off the noise machine and get to work supporting positive legislation in the Congress to permanently protect the open internet.
Tom Giovanetti is president of the Institute for Policy Innovation.